Large Tax On Bonuses Face Challenges
Professor Joseph A. Bankman is interviewed for a segment on ABC-7 News regarding a tax measure passed by the House of Representatives to tax bonuses paid to executives whose companies receive federal bailout money. Bankman discusses the legality of the measure:
To understand what the legal objections would be, ABC7's Mark Matthews went to Sanford's law school. To a leading tax attorney with experience in drafting tax legislation, he says opponents will present a couple of arguments.
"Well one of the arguments they're going to make is that it's a bill of attainder and what a bill of attainder, it's part of the constitution, and what it really aims to do is it prevents the legislature from jailing you without a trial," says Joseph Bankman, from the Stanford Law School.
Bankman says there have been a few bill of attainder cases that haven't involved criminal action. But he says in the AIG case, the tax is meant to retrieve public money, not to punish someone without a trial. He also says opponents will also likely argue the tax is unfair because it's retroactive....
"So the question is if the government passes a tax in March, can it be effective as of January? Unfortunately for the executives, the answer is yes. So this has been litigated a lot. They can of course litigate it again and hope the court will change its mind, but most experts think that's not going to happen," says Bankman.